Bajaj Housing Finance Shares Fall 6% as Lock-In Period Ends for 12.6 Crore Shares

Bajaj Housing Finance's stock saw a significant decline of over 6% on October 14, marking a critical moment as its one-month lock-in period for anchor investors came to an end. As a result, approximately 12.6 crore shares, or about 2% of the company's outstanding equity, have become eligible for trading on the market. This triggered the sharp decline in stock price, reflecting the market's anticipation of a potential oversupply of shares. According to Nuvama Alternative & Quantitative Research, these shares were previously locked and unavailable for sale, causing increased pressure once released.

The share price of Bajaj Housing Finance dropped to an intraday low of ₹141.58 per share during the day’s trading session. The stock closed the day at ₹141.58, down by 6.16% on the NSE, as its market valuation fell to ₹1,18,259.68 crore. The market’s reaction was swift, given the sizable amount of shares that were suddenly available for trading. This event is seen as an important phase for the stock, especially given its recent robust performance since its listing.

Bajaj Housing Finance, a wholly-owned subsidiary of Bajaj Finance Limited, had a highly successful initial public offering (IPO) earlier this year. The company raised ₹6,560 crore through its IPO, which saw overwhelming demand, with subscriptions reaching a massive ₹3.23 lakh crore. The stock made its debut on the exchanges with an impressive 114% premium, listing at ₹150 per share.

However, with the expiration of the one-month lock-in period for anchor investors, the company is now facing market volatility as these shares become tradable. This is just the first phase of unlocked shares, with the second lock-in period ending on December 12, at which point an additional 12.6 crore shares (2% of the outstanding equity) will also be eligible for trading. The release of these additional shares could potentially add further pressure on the stock's price.

Bajaj Housing Finance will soon report its first quarterly results after its stock market debut, scheduled for October 21. Analysts are keeping a close watch on the company’s performance, given its recent IPO success and the current market dynamics. Investors are keen to see if the company can sustain its initial momentum or if the release of additional shares will have a prolonged negative impact on the stock price.

Bajaj Finance and Bajaj Finserv, the parent companies of Bajaj Housing Finance, also saw their stocks trading down in tandem with Bajaj Housing Finance's decline. Bajaj Finance was trading flat at ₹7,230.60 per share on the NSE, showing a marginal drop of 0.98%. Similarly, Bajaj Finserv shares were down slightly by 0.019%, trading at ₹1,876.05 per share at around 1 pm on the same day.

Bajaj Housing Finance, which is registered with the National Housing Bank, was established in 2015 as a non-deposit-taking housing finance company. The company provides a range of financial solutions to individuals for the purchase, renovation, and construction of both residential and commercial properties. With a focus on building a strong customer base, the company’s financial products have been instrumental in supporting housing and real estate development.

The expiration of the lock-in period marks a significant moment for the company, as it adjusts to the demands of the open market and the challenges of increased liquidity. The company’s long-term performance will depend not only on its quarterly results but also on its ability to manage the market impact of unlocked shares. Investors are likely to monitor the situation closely, especially as the next lock-in expiration date approaches in December.

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The stock market reaction to the unlocking of shares is a common occurrence, especially in the case of high-profile IPOs. Investors are often cautious, anticipating that a sudden influx of available shares could lead to temporary price declines. However, if the company's performance remains strong and its financial results meet or exceed market expectations, the stock could recover from this short-term dip.

Overall, Bajaj Housing Finance’s share price movement on October 14 highlights the complexities of post-IPO trading and the challenges that arise when lock-in periods expire. The coming months will be crucial for the company as it navigates the additional unlocked shares and reports its first quarterly results.